CONSUMER DECISION

MAKING AND DIFFUSION Integrates everything that

we have studied so far
OF INNOVATIONS
 Consumer Decision
Making

Evaluation
Problem Post
Information of
Recognitio Purchase
Search Alternative
n Evaluation
s
EVALUATION OF Alternative evaluation and

PURCHASES selection process

Role of retailer – brick and mortar retailing
Amazon uses item-based collaborative filtering Algorithms
ALTERNATIVE EVALUATION
AND SELECTION PROCESS
HOW CONSUMERS MAKE
CHOICES
Not a linear or structured process as it may appear
Circular – emotional – and often incomplete
May be based on expediency rather than optimality
Situation plays a major role
Marketers assume consumers as rational decision makers - rational
choice theory
HOW CONSUMERS MAKE
CHOICES – IN REALITY
Bounded Rationality:
 a limited capacity for processing information
 Preferences are not stable
 They construct the decision process based on the situation at hand

Affective Choice: choices driven by how they make the user feel.
 “How do I feel about it?”
 Consummatory Motives (Behaviors that are intrinsically
rewarding) Prevail rather than instrumental (behaviors that help
achieve a goal – means to an end)
Imagine buying a dress –
Is the comfortable
Is it the right fit
Will it help reflect your
personality
Versus
Will it help impress others
HOW CONSUMERS MAKE
CHOICES – IN REALITY
Attribute-Based vs. Attitude-Based Choice:
 Requires the knowledge of more specific attributes at
the time, the choice is made, and it involves attribute-
by-attribute comparison
 The use of attitudes, intuitions, and impressions
 Attribute-based requires more time and effort, but
usually results in more optimal decisions.
 Consumers may use both in combination
 Role of Motivation, information availability and
situational factors is important
 Ques: identify and list the
evaluative criteria for a
consumer who is

EVALUATIVE CRITERIA contemplating buying a

sports watch for the first
time.

Intangible –
Nature of Evaluative Criteria style, taste,
prestige, feelings
Tangible – cost generated, brand
and attributes image
EVALUATIVE CRITERIA

Measurement of Evaluative Criteria Difficult to judge

 Which criteria are used?
when emotions are
 Direct vs. Indirect Measurement
involved
 Perceptual Mapping – [Brand performance on criteria]
 Perception of various alternatives on each criterion –
measured using
 Semantic Differential Scales
 Likert Scales
 Rank Ordering Scales
EVALUATIVE CRITERIA
Measurement of Evaluative Criteria
 Relative Importance of Criteria
 Constant Sum Scale – direct
 Conjoint Analysis – indirect
INDIVIDUAL JUDGMENT
AND EVALUATIVE
CRITERIA
External factors important in influencing consumer perceptions

Critical issues for marketers

 Accuracy of individual judgments
 Surrogate indicator – using one attribute to judge
performance on another
 Variations in attribute importance
INDIVIDUAL JUDGMENT
AND EVALUATIVE
CRITERIA
Accuracy of individual judgments
Role of sensory discrimination
Ability to distinguish between similar stimuli using the senses.
Role of just noticeable difference (j.n.d.)?
Minimum amount one stimuli can differ from another with the
difference still being noticed. We typically do not notice relatively
small differences between brands or changes in brand attributes.

When might a marketer want to stay BELOW the j.n.d.?

Get ABOVE the j.n.d.?
INDIVIDUAL JUDGMENT
AND EVALUATIVE
CRITERIA
What is a surrogate indicator?

 An attribute used to stand for or indicate Used when

• Consumers lack
another attribute (e.g.. High Price = high
quality) experience to make
 Reliance on surrogate indicators is a informed judgments
• Consumer motivation
function of predictive value and
confidence value. or interest in the
 Examples of surrogate indicators decision is low
include….. • Other quality
information is lacking
INDIVIDUAL JUDGMENT
AND EVALUATIVE
CRITERIA
Variations in attribute importance
 Usage situation
 Competitive context
 Advertising effects
INDIVIDUAL JUDGMENT
AND EVALUATIVE
CRITERIA – MARKETING
STRATEGY
•Testing for halo effects
•Evaluate functional characteristics of a product –
blind tests
•Use surrogate indicators
•Understand the various factors that can infl uence
consumer perceptions of the importance of
evaluative criteria
 Conjunctiv
e

Compensatory
Disjunctiv
e
Decisio
n Rules

Eliminatio
Lexicographic n by
aspects
 DECISION RULES
Conjunctive: Select all (or any or first) brands that surpass a minimum
level on each relevant evaluative criterion.

Price 3
Weight 4

Processor 3

Battery Life 1

After sale 2
Service
Display 3
Quality
 DECISION RULES
Disjunctive: Select all (or any or first) brands that surpass a satisfactory level
on any relevant evaluative criterion

Price 5
Weight 5
Processor NOT
CRITICAL
Battery NOT
Life CRITICAL

After sale NOT

Service CRITICAL

Display 5
Quality

When the disjunctive decision rule is used by a target market, it is critical to meet
or
 DECISION RULES
Elimination by-aspects- Rank the evaluative criteria in terms of
importance and establish satisfactory levels for each. Start with the
R C most important attribute and eliminate all brands that do not meet the
A
N
U
T
satisfactory level. Continue through the attributes in order of
K O importance until only one brand is left.
F
F “I want to buy the brand that has a high level of an important
Price 1 3 attribute that other brands do not have.”
Weight 2 4
Display 3 4
Quality
Processor 4 3

After sale 5 3
Service
Battery 6 3
Life
 DECISION RULES Marketing implication: Competitive
superiority should be emphasized

Lexicographic: Rank the evaluative criteria in terms of importance.

Start with the most important criterion and select the brand that scores
R
highest on that dimension. If two or more brands tie, continue A
through the attributes in order of importance until one of the N
K
remaining brands outperforms the others.
Price 1
Weight 2
Display 3
Quality
Processor 4

After sale 5
Service
Battery Life 6
 DECISION RULES
.

Compensatory: Select the brand that provides the highest

total score when the performance ratings for all the relevant
attributes are added (with or without important weights)
together for each brand.
UNDERSTANDING WHICH
DECISION RULES
ARE BEING USED…